A proposed Medicare rule change should reinforce Arkansas pharmacies in their continuing fight with pharmacy benefit managers over fees, more than a year after the U.S. Supreme Court unanimously ruled that Arkansas can legally regulate PBMs.
The December 2020 ruling “did help, but it hasn’t instantaneously fixed all the problems,” said John Vinson, CEO of the Arkansas Pharmacists Association. “We’ve still got work to do.”
One of the issues is direct and indirect remuneration fees, called DIR, which Vinson said result from a loophole in Medicare regulations that PBMs are exploiting. After a pharmacy fills a Medicare prescription, PBMs are clawing back money patients paid to pharmacies for the drugs, sometimes months after the drug was dispensed.
For years, rising pharmacy DIR fees under Medicare Part D have been hurting drugstores and “harming specialty patients who are living with life-altering and oftentimes life-threatening medical conditions,” Sheila Arquette, president and CEO of the National Association of Specialty Pharmacy, said in a statement this month.
Pharmacies could get some relief from the rule change offered recently by the Centers for Medicare & Medicaid Services.
This month, CMS proposed requiring Part D plans to apply all discounts they receive from network pharmacies at the point of sale, ensuring that the patient shares in the savings. CMS is proposing to redefine the negotiated price as the baseline, or lowest possible, payment to a pharmacy, and that change would be effective Jan. 1, 2023. The policy would lower Medicare patients’ out-of-pocket costs and improve price transparency and market competition in the Part D program, the news release said.
Between 2010 and 2020, pharmacy DIR fees skyrocketed, the NASP release said.
CMS is taking public comments on the issue and then will decide to implement the rule as it is, to modify it or to scrap it.
“We remain committed to working with CMS as it advances pharmacy DIR fee reform to ensure that reforms are transparent, fair and support specialty patients and the pharmacies that serve them,” Arquette said.
In January 2021, the National Community Pharmacists Association and the American Pharmacists Association filed a federal lawsuit against the U.S. Department of Health & Human Services over the regulations that allow the DIR fees. That lawsuit is pending.
Vinson said the association didn’t “believe that Congress ever would have intended for a health plan to artificially mark up the price at the point of sale, … so the patient is forced to pay more in order then to claw back money for profit later.”
Meanwhile, Vinson said, pharmacies have been filing more complaints against PBMs with the Arkansas Insurance Department as a result of the Supreme Court ruling.
“We’ve got a referee on the playing field now,” he said.
In 2019, the AID recovered $3,578 for Arkansas pharmacies, and in 2020 it recovered $10,920 from PBMs for reimbursing pharmacies below the cost of prescription drugs, Jennifer Bruce, a spokeswoman for the AID, said via email.
Last year, $1.1 million was recovered for Arkansas pharmacies, but $1.04 million of that was because of a correction made by a PBM as a result of a software error, Bruce said.
The Pharmaceutical Care Management Association, which represents PBMs, had challenged the 2015 Arkansas law requiring the PBM regulation in federal court. A spokesman for the PCMA didn’t immediately return a call for comment.
PBMs say they help hold down drug costs by negotiating with manufacturers on behalf of insurance companies and by providing pharmacists with instant approval of drug benefits.
But independent pharmacies say PBMs are middlemen who aren’t transparent about the real cost of drugs, with the ability to force retail pharmacies to choose between selling medicine at a loss or turning away patients.
With the Supreme Court ruling, however, “there have been a lot of pharmacies out there that have been able to get some of their issues resolved with complaints filed,” Vinson said.
The ruling has “made a tremendous difference in Arkansas and across the country,” he said. “It also gives me hope going into a future session that we know we can pass a law and enforce it.”